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SAT Clarifies Tax Rules On Sale Of Assets By Lessees In Finance Leaseback

27.09.10 19:02 Age: 14 yrs
SAT Clarifies Tax Rules On Sale Of Assets By Lessees In Finance Leaseback

LEHMAN LEE&XU

 

Since the sale of assets by lessees in finance leaseback became the new favorite of listed companies, the tax preference is given by State Administration of Taxation recently.

On September 8 issued an announcement related to the sale of assets by lessees in finance leaseback by the State Administration of Taxation, which focuses on value added tax and business tax and enterprise income tax. The announcement expressly provides that the sale of assets by lessees in finance leaseback is outside the range of collecting value added tax and business tax, and the income from the sale of assets by lessees in finance leaseback is not counted as sales revenue. Additionally the finance lease assets are subject to depreciation based on their original book value before sale. The interest on financing paid by lessees during the lease term shall be deducted before tax as financial expenses. This announcement will be taken effect from October 1 2010.

 

“The finance leaseback is welcomed by more listed firms these two years, and this announcement is encouraging absolutely,” commented Edward E. Lehman, managing Director of Lehman, Lee & Xu.

 

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